This article about the U.S. auto industry incorrectly said that the chief executives of the Big Three had told a congressional committee they would be willing to cut their annual salaries to $1. The head of Chrysler, Robert L. Nardelli, said he would be willing to do so, but the chief executives of General Motors and Ford did not say whether they would do the same. Nardelli reportedly takes a base salary of $1 already; Chrysler declined to confirm or deny the reports.
Automakers Press High-Stakes Plea for Aid
Wednesday, November 19, 2008
The chieftains of Detroit's Big Three automakers made a desperate appeal to skeptical lawmakers yesterday for $25 billion in emergency loans to forestall the possible collapse of the domestic auto industry, offering to cut their own salaries in exchange for government aid.
But the chances were looking increasingly bleak that Congress would quickly approve a lifeline to help the firms survive some of the most devastating economic conditions since Henry Ford founded the Ford Motor Co. in 1903.
In testimony before the Senate Banking Committee, the chief executives of Ford, General Motors and Chrysler blamed the failure of the global credit system for driving down auto sales and plunging their firms into crisis. Chrysler chief executive Robert L. Nardelli revealed that his company had considered filing for bankruptcy protection, but decided it would take too long to reach an accord with suppliers, lenders and labor.
"We're in a very fragile position," Nardelli said.
Even Ford, the strongest of the three, is worried about its long-term survival. Ford chief executive Alan R. Mulally said in written testimony that because the auto industry is "uniquely interdependent" on a nationwide chain of suppliers, the failure of even one of the companies could cause a "severe disruption" that would be felt by every auto plant in the country "within days, if not hours."
"In the face of incredibly fragile economic conditions and the interdependence of our industry, we believe it is appropriate at this time to join our competitors in asking for your support to protect against an uncertain economic future," Mulally wrote.
The stakes are high, the executives argued. The U.S. auto industry employs 240,000 workers. It is the largest purchaser of American-made steel, aluminum, iron, copper, plastics, rubber and electronic chips. Last year, it bought $156 billion in U.S. auto parts, supporting jobs in all 50 states. Auto sales typically account for 4 percent of the gross national product.
Several senators in both parties said they recognize the industry's importance to the national economy and the severity of the crisis that has left GM and Chrysler in danger of running out of money within months. But the patience of even some sympathetic lawmakers was tested by evasive answers from the executives about whether $25 billion would be enough to restore them to financial health or whether Congress, having approved one bailout, would be asked to approve another next year.
"I voted for $25 billion to help you restructure," said Sen. Robert Menendez (D-N.J.), referring to a package of low-interest loans Congress approved earlier this year to help the car companies retool factories to produce more fuel-efficient vehicles. "But when I hear you not being able to give us how this $25 billion will take you to that place in time in which you will be able repay the taxpayers of the country . . . well, it's a difficult proposition."
In one particularly testy exchange, Sen. Bob Corker (R-Tenn.) demanded to know how the three companies plan to divide the cash if Congress is persuaded to approve it.
"Obviously, you've all created a pact," Corker said. "I just want the numbers."
Nardelli quickly replied that Chrysler would seek $7 billion. Mulally said Ford wants about the same. And, after an initial vague response, GM Chairman G. Richard Wagoner Jr., confessed to hoping for as much as $12 billion.